Don’t bet the farm on inheritance tax change

Farming unions across the UK have vowed to keep campaigning against the new £1m limit on Agricultural Property Relief (APR) and Business Property Relief (BPR).

All farmers should play their part and keep supporting efforts to force a change to the new inheritance tax rules which are due to take effect in April 2026.

However, it is important to start thinking about what impact it might have on succession planning on your farm if the policy is introduced without any changes.

As reported last week, inheritance tax expert Stuart Maggs is not hopeful that the current government will back down.

All options for changing the policy have been dismissed by senior Labour politicians who appear unsympathetic to farmers’ concerns.

At this stage in the inheritance tax campaign, the best approach for farmers could be to hope for the best but plan for the worst.

The exact detail of the new changes will not be known until legislation is published in the autumn, but there are some initial steps that many farmers can take now.

£1m limit

A key starting point is to figure out exactly who owns what within the family farm. This is because the £1m limit on APR and BPR applies to each individual person, and not whole farm businesses. Having honest and frank conversations about succession planning within farm families is also important.

This has often been a difficult discussion within families, and it will not get any easier with the tax man in the background, so it is best to start this process early.

For younger farmers who have limited options to reduce the risk of inheritance tax in the event of their untimely death, serious consideration should be given to taking life insurance cover.

Some farmers are banking that Labour will lose the next general election, which will likely be in 2029. The hope is the limit on APR and BPR will be lifted shortly afterwards.

With Labour holding a huge majority and the Conservative Party so far failing to cut through in opposition, I wouldn’t want to bet the farm on it.